Pacific Land & Coffee Corp - Quarterly Report (10-Q)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 - For the quarterly period ended June 30, 2008

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from __________________ to __________________

Commission File Number 0-30595

PACIFIC LAND & COFFEE CORPORATION

(Exact Name of small business issuer as specified in its charter)

Delaware 33-0619256

(State or other Jurisdiction of I.R.S. Employer Identification No.)

Incorporation or Organization

500 Alakawa Street, Suite 220C , Honolulu, Hawaii 96817

(Address of Principal Executive Offices) (Zip Code)

(808) 371-4266

(Issuer's Telephone Number, including Area Code)

Indicate by check mark whether the Registrant (i) has filed all reports required to be filed by Section 13, or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (of for such shorter period that the Registrant was required to file such reports) and (ii) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
(Do not check if a smaller reporting company)

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

Common Stock, $.001 par value 13,610,659

Title of Class Number of Shares outstanding

at August 13, 2008

Transitional Small Business Format Yes No X

PACIFIC LAND AND COFFEE CORPORATION.

(A Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

March 31, June 30,

2008 2008

Unaudited Audited

Current Assets

Cash in bank $ 13,531 $ 18,542

Accounts receivable, net of allowance

for doubtful accounts of $3,879 and $2,084 15,314 19,591

Other Receivable 29,600 29,600

Income Tax receivable 44,880 44,880

Total Current Assets 103,325 112,613

Fixed Assets

Equipment 189,157 191,689

Leasehold Improvements 9,316 9,316

Less: Accumulated Depreciation (116,050) (110,910)

Total Fixed Assets 82,423 90,095

Other Assets

Rent Deposit 12,908 12,908

Patents, net of amortization

of $ 493,122 and $ 518,143 606,104 625,511

Research/License Agreement,

Net of amortization of $67,453 and $64,274 102,547 105,726

Total Other Assets 721,559 744,145

TOTAL ASSETS $ 907,307 $ 946,853

The accompanying notes are an integral part of the financial statements.

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities

Accounts Payable 360,780 $ 299,868

Credit Line 24,753 19,953

Payroll & Excise Taxes Payable 12,159 3,371

Accrued Interest 63,258 63,258

Note Payable – related Party 145,980 145,980

Current Portion of Long Term Debt – Note 12,840 13,177

Shareholder Advances 20,000 0

Total Current Liabilities 639,770 545,607

Long Term Liabilities

Note Payable – net of current portion - Note 19,230 23,190

Total Long Term Liabilities 19,230 23,190

TOTAL LIABILITIES 659,000 568,797

Non-Controlling Interest 81,132 103,304

Stockholders’ Equity (Deficit)

Preferred Stock - 1,000,000 shares authorized;

Par value of $.001 per share; 900,000 shares

issued and outstanding 900 900

Commo Stock - 50,000,000 shares authorized;

Par value of $.001 per share; 12,514,455

shares issued and outstanding 12,514 12,514

Capital in excess of par value 659,226 659,226

Deficit accumulated during the development stage (505,465) (397,888)

TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 167,175 274,752

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) $ 907,307 $ 946,853

The accompanying notes are an integral part of the financial statements.

PACIFIC LAND AND COFFEE CORPORATION.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Periods Ended June 30, 2008 and 2007

And for the Period from Inception (February 14, 2003) through June 30, 2008

(Unaudited)

CUMULATIVE

FROM INCEPTION

FOR THE THREE FOR THE THREE (FEBRUARY 14, 2003

MONTHS ENDED MONTHS ENDED TO

JUNE 30, 2008 JUNE 30, 2007 JUNE 30, 2008

Revenues

Sales $ 78,006 $ 55,681 $ 558,631

Total Revenues 78,006 55,681 558,631

Cost of Sales 44,562 25,982 361,767

Gross Profit 33,444 26,699 196,864

General and Administrative Expenses 162,362 52,197 799,643

Net Loss from Operations (128,918) (22,498) (602,779)

Other Income (Expense):

Interest Expense (831) (2,841 ) (25,514)

Total Other Income (Expense) (831) (2,841) (25,514)

Net Loss before

Non-controlling interest (129,749) (25,339) (628,293)

Non-Controlling Interest 22,172 -- 77,948

Loss before Income Tax (107,577) (25,339) (550,345)

Provision for Income Tax (Benefit) -- -- (44,880)

Net Loss $ (107,577) $ (25,339) $ (505,465)

Net Loss per Share $ (0.01) $ (0.01)

Weighted Average Shares

Outstanding 12,514,455 3,333,332

See accompanying Notes to Financial Statements.

PACIFIC LAND AND COFFEE CORPORATION.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Period Ended June 30, 2008 and 2007

And for the Period from Inception (February 14, 2003) Through June 30, 2008

(Unaudited)

CUMULATIVE

FROM INCEPTION

FOR THE THREE FOR THE THREE (FEBRUARY 14, 2003

MONTHS ENDED MONTHS ENDED TO

JUNE 30, 2008 JUNE 30, 2007 JUNE 30, 2008

Cash Flows from Operating Activities

Net Loss $ (107,577) $ (25,339) $ (505,465)

Adjustments to reconcile net loss to net cash provided

by operating activities

Non-controlling interest income

adjustment (22,172) -- (77,948)

Depreciation & amortization 30,258 3,127 78,695

Bad Debt 1,795 308 18,765

Stock Issed for payment of fees -- -- 128,783

Contributed Capital – non-cash fair market

value of start-up and organizational

services and costs -- -- 1,000

(Increase) Decrease in accounts

Receivable 2,482 (3,452) (2,439)

(Increase) Decrease in loans and receivables -- -- 1,039

(Increase) Decrease in income tax

Receivables -- -- (44,880)

(Increase) Decrease in rent deposit -- -- (2,252)

Increase (Decrease) in bank overdraft -- 6,303 --

Increase (Decrease) in accounts payable 60,912 7,490 (131,819)

Increase (Decrease) in payroll and excise

Tax payable 8,788 2,186 11,881

Increase (Decrease) in accrued interest -- 471 4,648

Net Cash Used by Operating

Activities $ (25,514) $ (8,906) $ (519,992)

Cash Flow from Investing Activities

Net Cash Used by Investing Activities -- -- --

Cash Flow from Financing Activities

Net Proceeds from Credit line 4,800 42 285

Proceeds from sale of common stock/

contributed cash -- -- 471,480

Proceeds from notes payable - related

party -- 9,000 49,700

Proceeds from advances from officer (net) 20,000 275 54,540

Repayments of long term note payable (4,297) (1,812) (18,744)

Repayments of note payable – related

party -- -- (328,278)

Net Cash Provided (Used) by

Financing Activities 20,503 7,505 228,983

Net Increase (Decrease) in Cash $ (5,011) $ (1,401) $ (291,009)

Beginning Cash Balance $ 18,542 $ 1,401 $ --

Cash acquired in merger with Coscina

Brothers Coffee Co. -- -- 1,418

Cash acquired in merger with Integrated

Coffee Technologies -- -- 303,122

Ending Cash Balance $ 13,531 $ -- $ 13,531

Supplemental Disclosure of Cash Flow Information:

Cash paid during the three months

for interest $ 114,822 $ -- $ --

Cash paid during the three months for income taxes -- $ -- $ --

Supplemental Disclosure of non-Cash Investing

And Financing Activities:

Conversion of debt to equity, including

related party debt forgiveness $ -- $ -- $ 117,763

Business Acquisitions

Fair value of assets acquired $ -- $ -- $ 1,275,343

Issuance of debt/assumption of liabilities -- -- (1,710,013)

Common Stock issued at Acquisition -- -- (76,441)

Non-controlling Interest -- -- (28,889)

See accompanying Notes to Financial Statements.

PACIFIC LAND AND COFFEE CORPORATION

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

June 30, 2008

Note 1 Interim Financial Statements

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of June 30, 2008, and the results of operations and cash flows for the three months ended June 30, 2008 and for the period from inception thru June 30, 2008.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-KSB and the audited financial statements for the year ended March 31, 2008 included therein. The results of operations for the three months ended June 30, 2008, are not necessarily indicative of the results of operations to be expected for the full fiscal year.

Note 2 Going Concern

The Company has limited operating capital with limited revenue from operations. Realization of a major portion of the assets is dependent upon the Company’s ability to meet its future financing requirements, and the success of future operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.

Note 3 Property and Equipment

Property and equipment is carried at cost and summarized as follows:

Accumulated

Cost Depreciation Net

Equipment $ 189,157 $ (106,734) $ 82,423

Leasehold Improvements 9,316 (9,316) -0-

Total $ 198,473 $ (116,050) $ 82,423

For the consolidated statements presented current depreciation expense is $ 7,672. Of the $189,157 property and equipment account $ 60,557 has been capitalized under a capital lease discussed below. As of June 30, 2008 the total accumulated depreciation associated with the capital lease was $ 32,551.

Note 4 Intangible Assets

Patents and licenses are carried at cost and summarized as follows:

Accumulated

Cost Amortization Net

Patents $ 1,099,226 $ 493,122 $ 606,104

Licenses 170,000 67,453 102,547

Total $ 1,269,226 $ 560,575 $ 708,651

Note 5 Long Term Debt

The Company has a capital lease due to a finance company with interest at 10% due in monthly installments of $1,289, through October, 2010. This note is secured by the Company’s equipment.

Maturities of long- term debt are as follows:

Year Ending

June 30,

2009 $ 12,840

2010 14,181

2011 5,049

-----------

Total $ 32,070

======

Note 6 Related Party Transactions

One officer of the Company has advanced personal funds to the Company to assist in

meeting operating cash needs. The Company has recorded a liability of $20,000 to a shareholder as of June 30, 2008. The unsecured loan bears no interest and is due on demand.

Note 7 Subsequent Event

Subsequent to period end, a shareholder loaned the Company $90,000, in addition to the $20,000 disclosed in note 6, on an unsecured note, bearing no interest, and due on demand.

Also subsequent to period end, 1,096,204 shares of the Company’s subsidiary Integrated Coffee Technologies were converted into shares of Pacific Land & Coffee.

Note 8 Recent Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), “Business Combinations” (“FAS 141R”) and Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (“FAS 160”). These new standards are the U.S. GAAP outcome of a joint project with the International Accounting Standards Board (“IASB”). FAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 and will significantly change the accounting for business combinations in a number of areas, including the treatment of contingent consideration, acquisition costs, intellectual property, research and development, and restructuring costs. FAS 160 establishes reporting requirements that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. The Company is currently evaluating the impact of adopting FAS 141R and FAS 160 on its Consolidated Financial Statements which are effective for the Company at the beginning of its fiscal year 2010.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“FAS 161”), which requires enhanced disclosures about a company’s derivative and hedging activities. The Company currently is evaluating the impact of the adoption of the enhanced disclosures required by FAS 161 which is effective for the Company at the beginning of its fiscal year 2010.

In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting Principles (“FAS 162”). The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with generally accepted accounting principles (“GAAP”) for nongovernmental entities in the United States. FAS 162 is effective 60 days following SEC approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” The Company is currently evaluating the impact, if any, of adopting FAS 162, on its Consolidated Financial Statement

In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts – an Interpretation of FASB Statement No. 60 (“SFAS 163”). SFAS 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claim liabilities. This Statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. The Company does not expect that the adoption of SFAS 163 will have a material impact on its financial statements.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

We did not receive revenues from operations in our specialty coffee segment until the quarter ended September 30, 2003.  We sell roasted blends to various customers and we broker green bean orders as well.  With respect to coffee brokerage orders, we do not take ownership of the green beans, but only receive a commission on the sale. This contrasts with the sales of roasted blend, in which we purchase the materials and resell to the purchaser.

Management’s experience in the coffee industry is that as typical for coffee brokerage and small specialty coffee sales, we do not have long term sales contracts. We do not have any written contracts for the sale of our product.  We produce and ship as purchase orders are received.  We must wait for future purchase orders to make sales in the future. Because coffee prices are variable and demand can also be variable, we believe that selling under long term contracts would not be practicable in our industry.  Our invoices are due net 30 days, but currently we are receiving payment immediately on shipment. The sales in the quarter ended June 30, 2008 were $78,006, compared to $55,681 for the three months ended March 31, 2007.  The gross margin as a percentage of sales decreased from 53% to 43% due to a cost increases from suppliers not passed on. Our general and administrative expenses primarily consisted of legal and professional fees related to our status as a public company.   These expenses increased in 2008 primarily due to higher costs associated with our public company status.

Our tropical plant segment has not yet realized significant revenues. Our nematode resistant variety is ready for sales but the genetically modified coffee plants will not be ready for sale during the next 12 months. We anticipate the need for about $2 million in funding to complete development of the tropical plant varieties and to increase marketing of our coffee blends. We received a $20,000 advance from an officer in the quarter and $90,000 subsequent to the end of the period. Our current liabilities exceeded our current assets as of June 30, 2008 by $536,445. The Company faces a serious cash shortage, but we have been able to pay the most critical payables as required from the officer/director and shareholder advances. Management believes that it can raise the required funds from current shareholders and from outside investors so that the Company can continue in operations.

We are seeking $2 million in funding for 12 months of our business plan as follows:

Marketing $ 200,000

General and Administration $ 400,000

Research and Development $1,400,000

We do not have any agreements or understandings with respect to sources of capital. We have not identified any potential sources. Investors cannot expect that we will be able to raise any funds whatsoever. Even if we are able to find one or more sources of capital, its likely that we will not be able to raise the entire amount required initially, in which case our development time will be extended until such full amount can be obtained. Even if we are successful in obtaining the required funding, we probably will need to raise additional funds at the end of 12 months.

Information included in this report includes forward looking statements, which can be identified by the use of forward-looking terminology such as may, will, expect, anticipate, believe, estimate, or continue, or the negative thereof or other variations thereon or comparable terminology. The statements in "Risk Factors" and other statements and disclaimers in this report constitute cautionary statements identifying important factors, including risks and uncertainties, relating to the forward-looking statements that could cause actual results to differ materially from those reflected in the forward-looking statements.

Since we have not yet generated significant and consistent revenues, we are a development stage company as that term is defined in paragraphs 8 and 9 of SFAS No. 7. Our activities to date have been limited to seeking capital; seeking supply contracts and development of a business plan. Our auditors have included an explanatory paragraph in their report on our financial statements, relating to the uncertainty of our business as a going concern, due to our lack of operating history or current revenues, its nature as a start up business, management's limited experience and limited funds. We do not believe that conventional financing, such as bank loans, is available to us due to these factors. Management believes that it will be able to raise the required funds for operations from one or more future offerings, in order to effect our business plan. No terms have been discussed, and we cannot predict the price or terms of any offering nor the amount of dilution existing shareholders may experience as a result of such offering.

Forward looking information

Our future operating results are subject to many factors, including:

œ our ability to complete development of our tropical plant varieties;

œ the impact of rapid and persistent fluctuations in the price of coffee beans;

œ general economic conditions and conditions which affect the market for coffee and coffee producers;

œ our success in implementing our business strategy or introducing new products;

œ our ability to attract and retain customers;

œ the effects of competition from other coffee manufacturers and other beverage alternatives;

œ changes in tastes and preferences for, or the consumption of, coffee;

œ our ability to obtain additional financing; and

œ other risks which we identify in future filings with the SEC.

In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "predict," "potential," "continue," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate" and similar expressions (or the negative of such expressions). Any or all of our forward looking statements in this annual report and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward looking statement can be guaranteed. In addition, we undertake no responsibility to update any forward-looking statement to reflect events or circumstances which occur after the date of this report.

Critical Accounting Policies

Our discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The accounting policies that we follow are set forth in Note 1 to our financial statements. These accounting policies conform to accounting principles generally accepted in the United States, and have been consistently applied in the preparation of the financial statements.

Off-Balance Sheet Arrangements

We have no off balance sheet arrangements.

Recently Enacted Accounting Pronouncements

Effect of Inflation and Foreign Currency Exchange

The Company has not experienced any effect of inflation in the price of its products. Nor has it experienced unfavorable profit reductions due to currency exchange fluctuations or inflation with its foreign customers. All sales transactions to date have been denominated in U.S. Dollars.

Accounts Receivable and Allowance for Doubtful Accounts

Trade and other accounts receivable are reported at face value less any provisions for uncollectible accounts considered necessary. The Company estimates doubtful accounts on an item-to-item basis and includes over-aged accounts for any trade receivable as part of allowance for doubtful accounts, which are generally accounts that are ninety-days or more overdue. When accounts are deemed uncollectible, the account receivable is charged off and the allowance account is reduced accordingly.

Revenue Recognition

The Company recognizes revenues in accordance with the Securities and Exchange Commission, Staff Accounting Bulletin (SAB) number 104, Revenue Recognition . SAB 104 clarifies application of U.S. generally accepted accounting principles to revenue transactions.

Revenue on coffee and accessory sales is recognized as products are delivered to the customer or retailer. That is, the arrangements of the sale are documented, the product is delivered to the customer or retailer, the pricing becomes final, and collectability is reasonably assured. The Company may also recognize revenue from brokered coffee sales. This revenue is recognized when the transaction is completed based on the contract terms. Brokered coffee sales shall be recorded as the net commission recognizable to the Company.

Item 3. Quantitative and Qualitative Disclosures About Market Risk. As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

Item 4T . Controls and Procedures. Disclosure Controls and Procedures Evaluation of disclosure controls and procedures.

The Company's principal executive officer and its principal financial officer, based on their evaluation of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d -14 (c) as of June 30, 2008. , Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to management, including our principal executive officer/principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in internal controls . There were no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's internal controls subsequent to the date of their evaluation.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS - None

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS - None

Item 3. DEFAULTS UPON SENIOR SECURITIES - None

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None

Item 5. OTHER INFORMATION - None

Item 6. EXHIBITS

Exhibits

31. Certifications, John L. Hales and Tyrus C. Young, CEO and CFO respectively.

32. Certification pursuant to 18 U.S.C. Section 1350 of John L. Hales and Tyrus C. Young

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PACIFIC LAND AND

COFFEE CORPORATION

Date: August 13, 2008 By: /s/ Tyrus C. Young

Tyrus C. Young

Chief Financial Officer

(chief financial officer

and accounting officer and

duly authorized officer)

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